Usually the term "annuity" relates to a contract between an individual and a life insurance company. The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income. Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. Annuities due are a type of annuity where payments are made at the beginning of each payment period. C) IRAs. Reference: 12.3.3 in the License Exam. B)II and III. An annuitant assumes the investment risk of a variable annuity and is not protected by the insurance company from capital losses. *BEST Suited for VA-Age 56, available cash to invest, maxes out IRA and 401(k) plan VA will be supplemental income, would not be suitable for cust. *The accumulation period of a variable annuity may continue for many years. D)I and II. PGIM Fixed Income has over $900 billion in assets under management across a broad array of fixed . A)II and IV. can be sold by someone with only an insurance license A variable annuity has two phases: an accumulation phase and a payout (annuitization) phase. C) with guaranteed minimum withdrawal benefits (GMWBs) a lifetime of periodic payments is guaranteed Question #14 of 48Question ID: 606823 Fixed annuities. Sample problems from Chapter 9. . Reference: 12.3.3 in the License Exam. If one purchases an annuity for a set price, the issuing company would invest the funds and hold them until they are supposed to be disbursed, generally based on the owner's age. Policyholders . These contracts come with high surrender charges. D) None, because it is the proceeds from a life insurance company. *Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. All of the following characteristics are shared by both a mutual fund and a variable annuity's separate account EXCEPT: Job Classification: Corporate - Legal and Compliance. That can adversely affect your returns over the long term, compared with other types of investments. Because they have a separate account in which the investor assumes the investment risk, they can only be sold by individuals with both insurance and securities licenses. A) partially a tax-free return of capital and partially taxable. Science Health Science Nursing. C)A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. D) 4500. a variable annuity does not guarantee an earnings rate of return. A separate account will invest in a number of different securities. C)3800. This recommendation is: A guaranteed death benefit guarantees that the beneficiary will receive a death benefit if the annuitant dies before the annuity begins paying benefits. Reference: 12.1.2 in the License Exam, Question #39 of 48Question ID: 721469 A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. Question #24 of 48Question ID: 606806 If the customer takes a withdrawal of $10,000, what are the tax consequences? Fixed annuities, on the other hand, provide a guaranteed return. regulated under both securities and insurance laws. C)not suitable because a lifetime income rider is only for someone who is already retired Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. B)I and IV. B) Municipal bonds. An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. If at all you go deeper, then you will find a wide range of annuity products from a variety of companies. The earnings are taxable but the cost basis is returned tax free. *This annuity is nonqualified, which means the client has paid for it with after-tax dollars and has a basis equal to the original $29,000 investment. However, at the end of the period certain the payments to the named beneficiary (the spouse) will stop. *Funding a VA contract by cashing out either life insurance policies or existing VA contracts, especially those held for a short period of time is not suitable. *Waiver of premium is a benefit available on qualified life insurance contracts, usually in the form of a rider, which provides for the waiver of premium payments that fall due while the policyholder is totally disabled. Periodic payments are not a consideration because normally the payments into an annuity are level or in a lump sum. Reference: 12.3.3 in the License Exam, Question #34 of 48Question ID: 606834 C) II and IV. Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Eric W. Noreen, Peter C. Brewer, Ray H Garrison. B. A) A variable annuity How does an indexed annuity differ from a fixed annuity? The value of an annuity unit varies from month to month according to the performance of the separate account in comparison to the assumed interest rate. B) II and III. Reference: 12.1.2.1.2 in the License Exam. An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. Though there is no beneficiary designation during the annuitization, this is not an issue for this annuitant. *Contributions to a nonqualified variable annuity are not tax deductible. D) I and IV *During the accumulation phase, the number of accumulation units will increase as additional money is invested. B) I and III. D)the state insurance department. B) the number of annuity units is fixed, and their value remains fixed. Refinancing a home to draw out equity has been identified by FINRA as an abusive sales tactic regarding the sales of VAs. During payout, distributions will fluctuate due to performance in the separate account. Question #45 of 48Question ID: 606795 Question #33 of 48Question ID: 606832 Are There Penalties for Withdrawing Money From Annuities? A)the yield is always higher than mortgage yields. the agent must be licensed in both insurance and securities. B) I and III. A) be paid to a designated beneficiary. Which of the following is NOT an accurate statement concerning a variable life insurance contract? D) an accounting measure used to determine the contract owner's interest in the separate account. The investor purchased accumulation units. An individual retirement annuity is an investment vehiclesimilar to an individual retirement accountthat is offered by insurance companies. Future annuity payments will vary according to the separate account's performance. C) The investor's concerns about taxes. Reference: 12.3.4 in the License Exam, Chapter 16: U.S. Government and State Rules a, Chapter 17: Other SEC and SRO Rules and Regul, Chapter 15: Ethics, Recommendations, and Taxa, Chapter 13: Direct Participation Programs, Fundamentals of Financial Management, Concise Edition, Joe B. Hoyle, Thomas F. Schaefer, Timothy S. Doupnik, Carl Warren, James M Reeve, Jonathan E. Duchac. Variable annuities must be registered with: Reference: 12.2.1 in the License Exam. a variable annuity does not guarantee payments for life. A)II and IV. Then find the probability of the event. An accumulation unit in a variable annuity contract is: A)an accounting measure used to determine the contract owner's interest in the separate account. Because they have a separate account in which the investor assumes the investment risk, they can only be sold by individuals with both insurance and securities licenses. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. A) Life-only annuity is required by the Securities Act of 1933. For a retired person, which of the following investments would provide the greatest protection against inflation? Question #26 of 48Question ID: 606811 Sample problems from Chapter 9 . C) none of these. A) two people are covered and payments continue until the second death. A) a minimum rate of return is guaranteed. Fixed income instruments, like bonds and fixed annuities, are subject to purchasing power risk. B)4200. Your 65-year-old client owns a nonqualified variable annuity. Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. B) The death benefit cannot ever be more than the guaranteed benefit. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? D) Growth mutual funds. In March, the actual net return to the separate account was 8%. The value of the annuity units varies. In addition, if the customer is not at least 59-, there will be a tax penalty of an additional 10%. C) II and IV *Variable annuity contracts were devised to help investors keep pace with inflation. As part of his profile he stresses that he has had uncomfortable experiences in the past with the stock market and is not inclined to invest in anything that is based on stock market performance and would opt for principal protection instead. All of the following statements regarding variable annuities are true EXCEPT: A) variable annuities offer the investor protection against capital loss. Immediate annuities purchase annuity units directly. Question #27 of 48Question ID: 606818 C) annuity units. approve changes in the plan portfolio. The growth portion is subject to a 10% penalty. Classifying annuities There are many categories of annuities. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? 222. \hspace{7pt} b. January 444, to record the employers payroll taxes on the payroll to be paid on January 444. Her agent recommended she choose a variable annuity as a safe haven for the funds. B) II and III. Determine the revenue equation given the profit and expense equations. A) defined contribution plans. A joint life with last survivor annuity: A rider or statement of condition that allows a variable life insured to maintain policy coverage after becoming disabled is a benefit known as Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. Your client owns a variable annuity contract with an AIR of 4%. D) the number of annuity units becomes fixed when the contract is annuitized. All of the following statements regarding variable annuities are true EXCEPT: Variable annuities should be considered long-term investments due to the limitations on withdrawals. A variable annuity's separate account is: A) used for the investment of monies paid by variable annuity contract holders B) separate from the insurance company's general investments C) operated in a manner similar to an investment company D) as much a security as it is an insurance product All of the above The value of the separate account is now $30,000. A variable annuity is a type of annuity contract in which the value can vary based on the performance of an u . Suppose that 20%20 \%20% of their users are United States users who log on daily. The funds in an annuity are off-limits to creditors and other debt collectors. Reference: 12.1.2 in the License Exam. Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. 5 Q All of the following are characteristics of variable whole life EXCEPT the premium is level there is no guaranteed cash value there is no guaranteed minimum death benefit. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. A) The entire amount is taxed as ordinary income, because it is not life insurance. III. C)Corporate bonds. The upside was the possibility of higher returns during the accumulation phase and a larger income during the payout phase. a life insurance holder dies sooner than expected. C)prime rate. Explain what is meant by positive and negative B)I and III. A)II and IV. A customer has a nonqualified variable annuity. In addition, if the customer is not at least 59-, there will be a tax penalty of an additional 10%. C)number of accumulation units. These include white papers, government data, original reporting, and interviews with industry experts. Who assumes the investment risk in a variable annuity contract? If in the following year, the S&P 500 declined by 5%, the annuities value would remain at $107,000 because gains are locked in each year. A) It will be higher. They are also riddled with fees, which can cut into profits. B)variable annuities are classified as insurance products. C)annuity units. A universal variable life policy should be purchased primarily for its insurance features, not its investment features. C) payments continue for a pre-determined period of time. Distributed along a dermatome. A) Any tax due is deferred. Question #17 of 48Question ID: 606802 B) The entire $10,000 is taxable as ordinary income. B)II and III. The growth portion is taxed as ordinary income. Reference: 12.1.2 in the License Exam, Question #23 of 48Question ID: 901858 are purchased primarily for their insurance features D)all return of cost basis and nontaxable, Annuitized payments from a variable annuity are viewed for tax purposes as part earnings and part cost basis. D) II and III. III) A hierarchy of corporate staff evaluates divisions' plans and performance. D) Variable annuities. Suggesting that loans or drawing equity from a home to fund VA contracts have also been targeted as abusive sales practices. D)the safety of the principal invested. They are more suitable for individuals who can fund the annuity with cash, want to supplement existing retirement benefits they have already funded, are comfortable with the market risk associated with a VA separate account portfolio and anticipate a long retirement. Once annuitized, the number of annuity units does not vary. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). B) Age 78, retired for 20 years, lives comfortably and wants to leave all liquid assets to children Your customer is interested in a variable annuity but is unclear on some of the details regarding different specifications and riders that can be attached to the contract. D) Two-thirds of the withdrawal is taxable as ordinary income. *Distributions from a nonqualified plan represent both a return of the original investment made in the plan with after-tax dollars (a nontaxable return of capital) and the income from that investment. A customer has an investment objective of keeping pace with inflation while assuming moderate risk. a) What percentage of Facebook's users are from the United States? Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. A)There is no tax as the withdrawal is considered return of capital. Reference: 12.1.4.1 in the License Exam. A) partially a tax-free return of capital and partially taxable. "Variable Annuities: What You Should Know," Page 6. D)money market funds. Annuities: How to Find the Right One for You, How a Fixed Annuity Works After Retirement, Pros and Cons of Indexed Universal Life Insurance. D)I and IV, Universal variable life policies are insurance company products that should be purchased primarily for the insurance features they offer rather than as an investment. Reference: 12.2.1 in the License Exam. Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. The following information about the payroll for the week ended December 303030 was obtained from the records of Vienna Co.: Salaries:Deductions:Salessalaries$670,000Incometaxwithheld$198,744Warehousesalaries110,000Socialsecuritytaxwithheld51,714Officesalaries234,000Medicaretaxwithheld15,210$1,014,000U.S. Distributions from such an annuity are computed on a LIFO basis with the income taxed first. C) There is no tax as the withdrawal is considered return of capital. A the safety of the principal invested B the yield is always higher than bond yields. Reference: 12.1.4 in the License Exam. How Good of a Deal Is an Indexed Annuity? Based only on these facts, the variable annuity recommendation is Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies. Once a customer annuitizes a variable annuity, which of the following statements are TRUE? Fixed annuities pay a fixed monthly benefit which loses purchasing power if there is inflation. A registered representative's (RR) customer is speaking of a variable life insurance contract he owns. It was a lump-sum purchase. A)each annuity unit's value and the number of annuity units vary with time. Based on this information the RR should: For example, when paying rent, the rent payment (PMT) III. *Annuity death benefits are generally paid in a lump sum. None of the other investments listed here offer tax-deferred growth. Your client owns a variable annuity contract with an AIR of 4%. EEO IS THE LAW . 2019 Ted Fund Donors When a variable annuity contract is annuitized, the number of annuity units is fixed. No software installation. Distributions from nonqualified variable annuities are: While variable annuities have greater potential for earnings, since their interest rate rises and falls with their underlying investments, they can lose money. The amount of the purchase payments that go into the account may be less than you paid because fees were taken out of the purchase payments. What is the annual cash flow generated from the new machine? A) a minimum rate of return is guaranteed. Vaccine has decreased the incidence. A security is any investment for profit with management performed by a third party. IV. An Immediate Annuity is designed to provide each of the following features, EXCEPT: The creation of an estate. Based on the clients profile which of the following would be the best recommendation? "Variable Annuities: What You Should Know," Pages 67. C) Unit refund life option (primary needs). Surrender fees and penalties for early withdrawal. If the account is annuitized, the investor has chosen a payout option. Question #36 of 48Question ID: 606805 Find the per-day expense for one of these travelers who had a z-score of -1.6. c. A Bargain Times Vacation Blog writer claimed to have done this vacation for a cost of$710 per person. Dividing the funds available so as to fund 2 separate contracts, whether they be joint with last survivor or life income, would not be cost efficient for spouses. Before buying a variable annuity, investors should carefully read the prospectus to try to understand the expenses, risks, and formulas for calculating investment gains or losses. Travel Times Journal found that the average per person cost of a 10-day trip along the Pacific coast, per person, is $1,015. D)Joint and last survivor annuity. A)II and III Herpes Zoster has all of the following characteristics except: Group of answer choices. Annual depreciation on the machine is$12,000, and the tax rate of the company is 25%. Ted's Bio; Fact Sheet; Hoja Informativa Del Ted Fund; Ted Fund Board 2021-22; 2021 Ted Fund Donors; Ted Fund Donors Over the Years. The correct answer was: partially a tax-free return of capital and partially taxable. The features of variable deferred annuities are many. D) II and III. D)Variable annuity contract with a discussion regarding legislative risk, A VA with its investments in the separate account subject to market risk would not align with the customer's objective. Annuity units are units of ownership when the contract is in the payout stage. Question #25 of 48Question ID: 606819 When may a variable annuity account be surrendered? The number of annuity units rises once annuitization begins. A registered representative explaining variable annuities to a customer would be CORRECT in stating that: C) During the annuity period. B)IRAs. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: There is a guaranteed minimum interest rate, normally amounting to between 1 and 3 percent. Immediate life annuity with 10-year period certain. The value of an annuity unit varies from month to month according to the performance of the separate account in comparison to the assumed interest rate. CDs insured by the FDIC. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. A)Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. The number of accumulation units can rise during the accumulation period. B)a majority vote from the shareholders is required to change the investment objectives. Registration with FINRA is de facto registration with the SEC; no registration is required by the state banking commission. A universal variable life policy should be purchased primarily for its insurance features, not its investment features. A) II and III. B) taxed as ordinary income. An investor who has purchased a nonqualified variable annuity has the right to: 6102..55.001) is being updated on an ongoing basis. B) I and II. He makes the following four statements, all of which are true EXCEPT *A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. Variable annuities were introduced in the 1950s as an alternative to fixed annuities, which offer a guaranteedbut often lowpayout during the annuitization phase. A) I and II View full document. A) 4000. *During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. C) the yield is always higher than bond yields. Question #22 of 48Question ID: 606803 B)mutual fund units. Drives - are hardwired characteristics of the brain that correct deficiencies or maintain an internal equilibrium by producing emotions to energize individuals. You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments. A) There is no risk in a variable annuity. 8 annuities provide a guaranteed rate of return, whereas annuities provide conservative to aggressive investments whose rates of return are not guaranteed. A) mutual fund units. A) I and III. B) value of annuity units. A) I and III. Of the total payroll for the last week of the year, $30,000\$30,000$30,000 is subject to unemployment compensation taxes. B)Two-thirds of the withdrawal is taxable as ordinary income. No paper. An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: DR:BASSANT ADEL 9 QUIZ CH 6 Choose the correct answer: 1-Insurance policy benefits are classified on an insurance company's balance sheet as A. liabilities, because the insurance company may have to pay out the benefits B. assets, because policy benefits are valuable to the company C. liabilities, because customers may fall behind on their premium payments D. assets, because policy benefits . the state insurance commission. It's somewhat similar to a variable life insurance policy in that: You can choose how the product's value is invested. is required by the Securities Act of 1933. IBM is a global brand and has its presence in 170 countries and operates . B) The investor's marital status. Facebook reports that 70%70 \%70% of their users are from outside the United States and that 50%50 \%50% of their users log on to Facebook daily. A)Corporate debt securities The amount taxed is the amount of the lump-sum payment minus the deceased's cost basis in the investment. C. Future annuity payments will vary according to the separate account's performance. && \hspace{10pt}\text{Group insurance} & \underline{45,630}\\ C) The ordinary income on the proceeds over the cost basis plus 10% of the net gain (if any) if Sue is younger than 59- years old. do not have a separate account Annuities are similar to other forms of investing in that the owner invests money with the hope that it will gain in value, but annuities also come with higher fees than most mutual funds. guarantees payments for a certain period of time. B) payment guarantee. Outgoing personality with the ability to develop relationships (i.e., "People Person") and a sincere desire to help others Fearless, positive attitude, and willingness to be accountable for results Organized, detail-oriented, and excellent time-management skills A desire for continuous learning D) A 50 year old individual with $50,000 cash to invest who has already made the maximum contributions to an IRA and the 401(k) plan at his place of employment and would like to minimize some of the tax consequences of his currently high tax bracket. Post navigation A)I and IV. C) III and IV. A) complete all paper work to purchase the annuity contract and obtain the clients signature immediately. Assuming that the payroll for the last week of the year is to be paid on December 313131, journalize the following entries: Which of the following statements is not true about the characteristics of a trend? B) The policyowner. The number of annuity units becomes fixed when the contract is annuitized; it is the value of each unit that fluctuates. Variable annuities gave buyers a chance to benefit from rising markets by investing in a menu of mutual funds offered by the insurer. But again, the need to designate beneficiaries is not an issue for this annuitant. B)changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. Needs - are goal-directed forces that people experience. D)accumulation units. What Are the Distribution Options for an Inherited Annuity? If the client, who is in a 30% tax bracket, makes a random withdrawal of $15,000, what will the tax liability to the IRS be? Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable?
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